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EX-31.1 - AMERICAN FIRST FINANCIAL INC | ex31-1.htm |
EX-32.1 - AMERICAN FIRST FINANCIAL INC | ex32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
———————
FORM
10-Q
———————
X
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
|
ACT
OF 1934
|
|
For
the quarterly period ended: September 30, 2011
|
|
or
|
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
|
|
ACT
OF 1934
|
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For
the transition period from:
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Commission
File Number: 000-53578
———————
AMERICAN
FIRST FINANCIAL, INC.
(Exact
name of registrant as specified in its charter)
———————
Florida
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59-3707569
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(State
or other jurisdiction
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(Federal
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of
incorporation or organization)
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Identification
No.)
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12900
Vonn Road Suite B102 Largo, FL 33774
(Address
of Principal Executive Office) (Zip Code)
Phone
727-595-0975 Email:
americanfirst09@yahoo.com
(Former
name, former address and former fiscal year, if changed since last
report)
———————
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the
Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was
|
||||||||
required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
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X
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Yes
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No
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|||||
Indicate
by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any,
every
Interactive Data File required to be submitted and posted pursuant to Rule
405 of Regulation S-T (§ 232.405
of
this chapter) during the preceding 12 months (or for such shorter period
that the registrant was required to submit
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||||||||
and
post such files).
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Yes
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X
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No
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|||||
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
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||||||||
Large
accelerated filer
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Accelerated
filer
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|||||||
Non-accelerated
filer
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(Do
not check if a smaller
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Smaller
reporting company
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X
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|||||
reporting
company)
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||||||||
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
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||||||||
Yes
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X
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No
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||||||
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date. The number of shares of the
issuer’s common stock, par value $.05 per share, outstanding as of
November 10, 2011was 24,982,205
|
PART I –
FINANCIAL INFORMATION
Item
1.
|
Financial
Statements.
|
American
First Financial, Inc.
As
of September 30, 2011 (unaudited) and March 31, 2011 (audited) and
for
the
three and six months ended September 30, 2011 and 2010 (unaudited)
Contents:
Financial
Statements:
|
||||
Balance
Sheet
|
3 | |||
Statements
of Operations
|
4 | |||
Statements
of Cash Flows
|
5 | |||
Notes
to Financial Statements
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6 | |||
Balance
Sheet
|
||||||||
September
30,
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March
31,
|
|||||||
2011
|
2011
|
|||||||
(unaudited)
|
(audited)
|
|||||||
Assets
|
||||||||
Current
assets
|
||||||||
Cash
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$ | 579 | $ | 994 | ||||
Total
current assets
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579 | 994 | ||||||
Property
& equipment, net of accumulated
|
||||||||
depreciation
of $10,673 and $9,839, respectively
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1,000 | 1,834 | ||||||
Intangibles
|
10,000 | 10,000 | ||||||
Total
Assets
|
$ | 11,579 | $ | 12,828 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accrued expenses
|
$ | 2,351 | $ | 7,240 | ||||
Shareholder
loans
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77,399 | 70,961 | ||||||
Total
current liabilities
|
79,750 | 78,201 | ||||||
Total
liabilities
|
79,750 | 78,201 | ||||||
Stockholders'
Equity
|
||||||||
Redeemable
Convertible Preferred Stock: $.05 par
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||||||||
5,000,000
shares authorized (Series A & B)
|
||||||||
0
and 0 Series B shares issued and
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||||||||
outstanding,
respectively
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- | - | ||||||
Common
Stock, $.05 par value, 50,000,000 shares
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||||||||
authorized;
24,982,205 and 22,882,205 shares
|
||||||||
issued
and outstanding, respectively
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1,249,110 | 1,249,110 | ||||||
Additional
paid-in capital
|
(908 | ) | (908 | ) | ||||
Subscription
receivable
|
(10,000 | ) | (20,000 | ) | ||||
Accumulated
Deficit
|
(1,306,373 | ) | (1,293,575 | ) | ||||
Total
stockholders' equity
|
(68,171 | ) | (65,373 | ) | ||||
Total
Liabilities and Stockholders' Equity
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$ | 11,579 | $ | 12,828 | ||||
The
notes are an integral part of these financial statements.
American
First Financial, Inc.
|
||||||||||||||||
Statement
of Operations
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
For
the Three Months Ended
|
For
the Six Months Ended
|
|||||||||||||||
September
30,
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September
30,
|
|||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Origination
Fees - Global
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$
|
-
|
$
|
-
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$
|
-
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$
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1,531
|
||||||||
Consulting
fees
|
714
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-
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3,074
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-
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||||||||||||
Total
revenue
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714
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-
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3,074
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1,531
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||||||||||||
Operating
expenses:
|
||||||||||||||||
Selling
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-
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-
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-
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150
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||||||||||||
General
and administrative
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1,037
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1,414
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1,998
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3,850
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||||||||||||
Professional
expenses
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-
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1,000
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-
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2,200
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||||||||||||
Compensation
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6,100
|
800
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12,520
|
1,600
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||||||||||||
Stock-based
compensation
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-
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10,500
|
-
|
10,500
|
||||||||||||
Depreciation
|
417
|
417
|
834
|
834
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||||||||||||
Loss
on sale of property
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-
|
-
|
-
|
-
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||||||||||||
Total
operating expenses
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7,554
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14,131
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15,352
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19,134
|
||||||||||||
Net
operating loss
|
(6,840)
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(14,131)
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(12,278)
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(17,603)
|
||||||||||||
Interest
expenses
|
520
|
-
|
520
|
-
|
||||||||||||
Net
income (loss)
|
$
|
(7,360)
|
$
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(14,131)
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$
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(12,798)
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$
|
(17,603)
|
||||||||
Earnings
(loss) per share,
|
||||||||||||||||
primary
and dilutive
|
$
|
(0.00)
|
$
|
(0.00)
|
$
|
(0.00)
|
$
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(0.00)
|
||||||||
Weighted
average shares outstanding
|
||||||||||||||||
primary
and dilutive
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24,982,205
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22,882,205
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24,982,205
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22,557,547
|
||||||||||||
The
notes are an integral part of these financial statements.
American
First Financial, Inc.
|
||||||||
Statement
of Cash Flows
|
||||||||
(Unaudited)
|
||||||||
For
the Six Months Ended
|
||||||||
September
30,
|
||||||||
2011
|
2010
|
|||||||
Cash
Flows from Operating Activities:
|
||||||||
Net
(loss) income
|
$
|
(12,798)
|
$
|
(17,603)
|
||||
Adjustment
to reconcile Net Income to net
|
||||||||
cash
provided by operations:
|
||||||||
Depreciation
|
834
|
834
|
||||||
Stock-based
compensation
|
-
|
10,500
|
||||||
Compensation,
forgiveness of shareholder loan
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10,000
|
-
|
||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
payable and accrued expenses
|
(4,889)
|
2,000
|
||||||
Net
Cash (Used) Provided by Operating Activities
|
(6,853)
|
(4,269)
|
||||||
Cash
Flows from Financing Activities:
|
||||||||
Net
(repayments) proceeds of stockholder loans
|
6,438
|
3,754
|
||||||
Net
Cash (Used) Provided by Financing Activities
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6,438
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3,754
|
||||||
Net
increase (decrease) in Cash
|
(415)
|
(515)
|
||||||
Cash
at beginning of period
|
994
|
1,343
|
||||||
Cash
at end of period
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$
|
579
|
$
|
828
|
||||
Supplemental
cash flow information:
|
||||||||
Interest
paid
|
$
|
-
|
$
|
-
|
||||
Taxes
paid
|
$
|
-
|
$
|
-
|
||||
The
notes are an integral part of these financial statements.
American
First Financial, Inc.
Notes
to the Financial Statements
As
of September 30, 2011
Note
1 Organization,
Business Operations and Summary of Significant Accounting Policies
Organization
and Business Operations
American
First Financial, Inc. (“AFF”) is a Florida corporation formed in March, 2001.
AFF is a specialty mortgage origination firm that deals in wholesale
lending. Wholesale lending is the taking of retail mortgage loan
originations from mortgage brokers and getting them closed and funded for them,
as opposed to dealing directly with the retail customer. AFF’S
operations have primarily been the acceptance of loan submissions from
independent retail mortgage brokers and then presenting those loans to approved
wholesale lenders. AFF acted only as a broker
agent. As a broker agent, AFF does not assume any risk on its loans
and receives a small fee based on the loan volume for each loan it
places. The lenders that accept the loans have no recourse against
AFF. As of January 1, 2011, we have added mortgage consulting to our
business plan and receive fees from independent mortgage brokers to help them
package and present non-conforming and sub-prime mortgage loans to willing
lenders. We have presented loans from several states but primarily
present loans only from the Florida market. We have one office in
Largo Florida.
Summary
of Significant Accounting Policies
Basis
of Presentation
The
unaudited interim consolidated financial statements have been prepared pursuant
to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations, although the Company believes that the disclosures made
are adequate to make the information not misleading. It is suggested that these
consolidated financial statements be read in conjunction with the consolidated
financial statements and the notes thereto, included in the Company’s latest
Form 10-K.
In the
opinion of management, all adjustments consisting of normal recurring
adjustments necessary for a fair statement of the financial position at
September 30, 2011 and March 31, 2011 and the result of operations and cash
flows for the three and six months ended September 30, 2011 and 2010 have been
made.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Fair
Value Information
The
carrying amounts of the Company’s assets and liabilities approximate their fair
values represented in the accompanying balance sheets. The carrying amounts of
current assets and current liabilities approximate their fair value due to the
relatively short period of time between the origination of these instruments and
their expected realization. The carrying values of the note payable to
stockholder approximates fair value based on borrowing rates
currently available to the Company for instruments with similar terms and
remaining maturities.
Cash
and Cash Equivalents
The
majority of cash is maintained with a major financial institution in the United
States. Deposits with this bank may exceed the amount of insurance
provided on such deposits. Generally, these deposits may be redeemed
on demand and, therefore, bear minimal risk. The Company considers
all highly liquid investments purchased with an original maturity of six months
or less to be cash equivalents.
Revenue
Recognition
AFF
receives origination fees for the origination of loans and recognizes these when
the earnings process has been completed and documented through filings with
local governmental agencies, generally at closing.
AFF
receives consulting fees from independent mortgage brokers for helping to
package and present non-conforming and sub-prime loans to willing
lenders. Our fees are negotiated in advance with the independent
brokers and are recorded when the broker successfully submits a packaged loan to
a lender.
American
First Financial, Inc.
Notes
to the Financial Statements
As
of September 30, 2011
Mortgages,
Loan Loss Reserves and Capitalization
AFF does
not hold mortgages for investment and thereby does not calculate loan loss
reserves and is not subject to any minimum capital requirements by the State or
any regulatory agency. AFF utilizes the licenses of Global Lending
Group, a related party (see Related Party note), for closing and funding any
loans that need funding until their sale. These loans are the
property of Global Lending Group at closing and as such, are not reflected on
the financial statements of AFF.
Property
and equipment
Property
and Equipment is stated at cost. Depreciation is computed by the
straight-line method over estimated useful lives. The carrying amount
of all long-lived assets is evaluated periodically to determine if adjustment to
the depreciation and amortization period or the unamortized balance is
warranted. Based upon its most recent analysis, the Company believes that no
impairment of property and equipment exists at the balance sheet dates
presented.
Advertising
The costs
of advertising are expensed as incurred. Advertising expenses were
$0, $0, $0 and $0 for the three and six months ended September 30, 2011 and
2010, respectively. Advertising expenses are included in the
Company’s selling operating expenses.
Income
Taxes
The
Company uses the liability method to account for income taxes. As such, deferred
tax assets and liabilities are recorded based on the differences between the tax
bases of assets and liabilities and their carrying amounts for financial
reporting purpose, referred to as temporary differences. Deferred tax assets and
liabilities at the end of each period are determined using the currently enacted
tax rates applied to taxable income in the periods in which the deferred tax
assets and liabilities are expected to be settled or realized.
Earnings
(Loss) Per Share
Basic
earnings (loss) per share calculations are determined by dividing net income
(loss) by the weighted average number of shares outstanding during the year.
Diluted earnings (loss) per share calculations are determined by dividing net
income (loss) by the weighted average number of shares. At September 30, 2011
and March 31, 2011 there were 2,300,000 options outstanding that were considered
to be anti-dilutive.
Subsequent
Events
These
interim financial statements were approved by management and were issued on
November 11, 2011. Subsequent events have been evaluated through this
date.
Recently
Issued Accounting Pronouncements
We have
reviewed the FASB issued Accounting Standards Update (“ASU”) accounting
pronouncements and interpretations thereof that have effectiveness dates during
the periods reported and in future periods. The Company has carefully considered
the new pronouncements that alter previous generally accepted accounting
principles and does not believe that any new or modified principles will have a
material impact on the corporation’s reported financial position or operations
in the near term. The applicability of any standard is subject to the
formal review of our financial management and certain standards are under
consideration.
Note
2 Going
Concern
The
accompanying unaudited financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which assumes the realization of assets and satisfaction of liabilities in the
normal course of business, for the Company to continue as a going
concern.
As shown
in the accompanying financial statements, AFF incurred operating losses for the
three month periods ended September 30, 2011 and 2010. The Company has
accumulated deficit and a working capital deficit at September 30, 2011
(unaudited) and March 31, 2011 (audited). AFF has limited
financial resources with which to satisfy any future cash requirements and until
such time as AFF is able to raise additional capital or generate positive cash
flow from operations, these conditions raise substantial doubt about the
Company’s ability to continue as a going concern. AFF’s ability to achieve and
maintain profitability and positive cash flow is dependent upon AFF's ability to
generate origination and consulting fees at a rate sufficient to meet
obligations and costs.
American
First Financial, Inc.
Notes
to the Financial Statements
As
of September 30, 2011
Management
plans to fund its future operations by obtaining additional financing and
continuing to grow the mortgage origination base. However, there is no assurance
that AFF will be able to grow the business or to obtain additional financing
from investors or private lenders and, if available, such financing may not be
on commercial terms acceptable to AFF or its shareholders. The key
factors that are not within the Company's control and that may have a direct
bearing on operating results include, but are not limited to, acceptance of the
Company's business plan, the ability to raise capital in the future, the ability
to expand its customer base, and the ability to hire key employees to provide
services. There may be other risks and circumstances that management
may be unable to predict.
The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
Note
3 Property
and Equipment
Property
and equipment, as of September 30, 2011 and March 31, 2011 consist
of:
September
30, 2011
|
March
31,
2011
|
|||||||
Equipment
|
$
|
11,673
|
$
|
11,673
|
||||
Less
accumulated depreciation
|
10,673
|
9,839
|
||||||
$
|
1,000
|
$
|
1,834
|
Depreciation
of property and equipment was $417, $417, $834 and $834 for the three and six
months ended September 30, 2011 and 2010, respectively.
Note
4 Income
Taxes
The
Company has not recognized any deferred tax assets in association with net
operating losses and capital losses incurred from marketable equity securities
transactions, due to tax limitations and uncertainties concerning its ability to
generate taxable income in future periods. The tax benefit for the
periods presented is offset by a valuation allowance (100%) established against
deferred tax assets arising from the securities capital losses and other
temporary differences, the realization of which could not be considered more
likely than not. In future periods, tax benefits and related deferred
tax assets will be recognized when management considers realization of such
amounts to be more likely than not.
As of
March 31, 2011, the Company has unused net long-term capital losses of
approximately $405,000 and unused Net Operating Loss carry-forwards of
approximately $734,000 which begins to expire in
2028. Differences in financial statement accumulated deficit
and taxable losses resulting in Net Operating Losses are due to permanent
non-deductible stock transactions.
Note
5 Equity
The
company has two classifications of stock:
Preferred
Stock
Preferred
Stock includes 5,000,000 shares authorized at a par value of
$0.05. Preferred Stock has liquidation and dividend rights over
Common Stock, which is not in excess of its par value.
Common
Stock
Common
Stock includes 50,000,000 shares authorized at a par value of
$0.05. The holders of Common Stock and the equivalent Preferred
Stock, voting together, shall appoint the members of the Board of the
Directors. Each share of Common Stock is entitled to one vote. There
are currently 24,982,205 shares of common stock outstanding. There are no
outstanding shares of preferred stock.
American
First Financial, Inc.
Notes
to the Financial Statements
As
of September 30, 2011
On April
30, 2010, the Company issued 2,100,000 shares of common stock for $10,500 in
services. The per share prices were determined by negotiations
between Mr. Stirling and the other party depending on the reason for the sale,
the number of shares being purchased and the need for the services.
In 2006
the Company issued option awards under the employee incentive stock option plan
(“EISOP”) to Officers and Directors. Options granted under the
EISOP, in prior years, were issued for past performance and therefore vest
immediately at the date the options were granted. A total 2,300,000
options were issued with a strike price of $.05 expiring in ten years from issue
date (expires September 2016).
Note
6 Earnings
per Share
Due to
the net operating loss, all options and conversions are considered anti-dilutive
and therefore only basic calculation is provided. Basic weighted
average per share excludes items that would have been included in the
fully-diluted weighted average shares. Shares that would be included
would be, if exercised, options held by Officers and Directors (2,300,000 common
share equivalents).
Note
7 Related
Party Transactions
At
September 30, 2011 and March 31, 2011, the Company had a subscription receivable
due from and a shareholder loan payable to the major
shareholder.
During
the six months ended September 30, 2011 and 2010, officer compensation in the
amount of $10,000 and $0, respectively, were paid to Mr. Stirling.
During
the six months ended September 30, 2011 and 2010, rent expense in the amount
of $600 and $600, respectively, was paid to Mr. Stirling
Total
payments to Mr Stirling during the six months ended September 30, 2011 and 2010
were $10,600 and $600, respectively, which was 69% and 3% of the total expenses
respectively.
Through
an agreement, in exchange for shares that were given to Global Lending Group,
AFF utilizes the licenses of Global Lending Group for loan origination and
funding. At funding the loans become the property of Global Lending
Group. There is no recourse to loans brokered for Global
Lending Group and AFF acts solely as a mortgage broker on loans
originated.
The
amounts and terms of the above transactions may not necessarily be indicative of
the amounts and terms that would have been incurred had comparable transactions
been entered into with independent third parties.
Note
8 Commitments
and Contingencies
The
Company has limited needs for office space and subleases office space on a month
to month arrangement from the president. The Company has not entered into any
lease arrangement plan. In lieu of rent, the Company agreed to pay $100
per month to reimburse for expenses. Rent expense was $300, $300,
$600 and $600 for the three and six months ended September 30, 2011 and 2010,
respectively.
From time
to time the Company may be a party to litigation matters involving claims
against the Company. The Company does not believe any un-asserted
claims that may exist would have a materially adverse effect on the Company’s
financial position or results of operations
Item
2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
Forward-Looking
Statements
The
following discussion of our financial condition, liquidity and results of
operations should be read in conjunction with the financial statements and the
related notes. This report contains certain forward-looking statements and our
future operating results could differ materially from those discussed herein.
Certain statements contained in this discussion, including, without limitation,
statements containing the words "believes", "anticipates," "expects" and the
like, constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. We disclaim any obligation to update any such
factors or to announce publicly the results of any revisions of the
forward-looking statements contained herein to reflect future events or
developments.
General
American
First Financial, Inc. (“AFF”) is a Florida corporation formed in March, 2001. As
part of our recent financial statements our auditor has expressed an opinion
that based on our financial condition at the time “there is substantial doubt
about the company’s ability to continue as a going concern”. Our total assets at
September 30, 2011 were $11,579 and our liabilities were $79,750. We show a net
loss through six months of our current fiscal year of $(12,798).
AFF’S
operations through December 31, 2010 had primarily been the acceptance of loan
submissions from independent retail mortgage brokers and then presenting those
loans to approved wholesale lenders. AFF presents broker loan submissions to
Global Lending Group, Inc. (shareholder with 500,000 AFF common shares), or
directly to the lender contacts of Global, for underwriting, closing, and
funding of those loans. Compensation on a loan may consist of
percentage points charged to the borrower, percentage points paid by Global and
processing fees, all of which are negotiated prior to the processing of the
loan. After the loan closing, AFF receives the gross amount of all compensation
associated with the loan and then pays the originating broker a referral fee
equal to 2% of the loan amount. AFF then kept all other
compensation.
After
December 31, 2011, consulting fee revenues have been generated by assisted
un-affiliated brokers in packaging and presenting loans to various
lenders. We negotiate with independent retail mortgage brokers to
help them package and present non-conforming and sub-prime loans to willing
lenders
AFF has
specialized in non-conforming and sub-prime loans. Non-conforming
loans are loans that are credit worthy but, don’t meet other Fannie Mae or
Freddie Mac requirements such as loan size, property type, or debt ratios below
45%, Credit score requirements for non-conforming and conforming
loans are both above 600. The current maximum loan to value (LTV) for a
non-conforming loan is 80%. It is 95% for conforming
loans. Sub-prime loans are loans to borrowers who would be considered
poor credit risks, with credit scores below 600, a recent bankruptcy or loan
default experience. Collateral requirements for all of the above mentioned loans
are real property. On these types of loans most lenders won’t go above a seventy
percent loan to value.
This is
an area that AFF is most competitive due to the lender contacts and investors
known to Global Lending Group. Through Global, AFF can offer up to
eighty percent loan to value. Global Lending has allocated at least
$1,000,000 a month from its lines of credit for AFF loans if funded by Global.
If the loans are funded directly by Global Investors, the funds are unlimited.
AFF does not have any foreclosure or debt collecting or responsibilities. Any
such efforts would be undertaken by Global. Also AFF has no recourse provisions
or responsibilities attached to any loans that they process through
Global.
AFF
operates under a “Net Branch Agreement” with Global Lending Group, Inc. that
allows AFF to take loan originations from mortgage brokers and submit those
loans to Global for underwriting and funding. Under that agreement AFF is
allowed to act as a branch of Global’s but, is allowed to keep all fees or profits
of any kind from the closing of a loan. The agreement allows us to
use Global’s licensing and therefore we need no licenses of our own. Global owns
approximately 2% of the outstanding shares of AFF common stock.
Overall
economic conditions have certainly contributed to the decline in income for AFF.
As an example: the price of homes in Florida has dropped an average of 45% in
the last two years and the number of mortgage products offered have declined due
to tightened credit markets.
We do not
consider any of those market conditions pertinent to our forward business plan
which is creating more originations by acquisitions of small mortgage brokers
and growing our consulting business. AFF can market a variety of loan
products and services to mortgage brokers and small lenders who are too small,
or do not have the required net worth to get approval to submit loans directly
to the major lenders.
Summary
AFF
intends to attract investor dollars and grow the mortgage business through
acquisitions to the point of positive cash flow. We currently do not have cash
for acquisitions but, intend to use only stock for acquisitions. Management
believes that there are numerous small mortgage brokers around the country to be
acquired by a company they can place all of their sub-prime and non-conforming
loans. Any acquired broker will also have the availability of conforming, FHA
and VA loan products as well as use of the branch agreement that AFF has with
Global Lending Group, Inc for non-conforming loans. Management also
believes that there will be a number of new loan products introduced in the next
twelve months such as “stated income” loans coming back for self-employed
borrowers, which will significantly increase business.
We will
continue to provide loan and consulting services in the wholesale market to
raise operating cash while we work to acquire a base of retail firms and
increase the volume of loans to a sustainable level.
Results of
Operations
Three months ended September
30, 2011 and 2010
Revenues
For the
three months ended September 30, 2011 and 2010 revenues were $714, and $0,
respectively. Revenues in the current quarter were from consulting fees
from non-affiliated brokers. The Company does not currently advertise
their services while they are looking for brokers to acquire. They
consult with a limited number of brokers who here of them by word of
mouth.
Operating
Expenses
Operating
expenses were incurred in the amount of $7,554 and $14,131 for the three months
ended September 30, 2011 and 2010, respectively. The decrease in the
three month period ended September 30, 2011, was due to not repeating the
issuance of $10,500 of stock-based compensation in the current quarter offset by
recognizing $5,000 in officer compensation. .
Net Loss
For the
three month periods ended September 30, 2011, the Company recognized a loss of
$(7,360) compared to a loss of $(14,131) for the comparable three month period
of 2010. The decrease in loss was due mainly to a decrease in
stock-based compensation and professional fees.
Six months ended September
30, 2011 and 2010
Revenues
For the
six months ended September 30, 2011 and 2010 revenues were $3,074, and $1,531,
respectively. Revenues in the current quarter were from consulting fees
from non-affiliated brokers. Revenues in the six months ended
September 30, 2010 were from commissions on placing loans. The
Company does not currently advertise their services while they are looking for
brokers to acquire. They consult with a limited number of brokers who
here of them by word of mouth.
Operating
Expenses
Operating
expenses were incurred in the amount of $15,352 and $19,134 for the six months
ended September 30, 2011 and 2010, respectively. The decrease in the
six month period ended September 30, 2011, was mainly due to a decrease in
professional expenses. The issuance of $10,500 of stock-based
compensation in the prior year was offset by recognizing $10,000 in compensation
in the current year..
Net Loss
For the
six month periods ended September 30, 2011, the Company recognized a loss of
$(12,798) compared to a loss of $(17,603) for the comparable six month period of
2010. The decrease in loss was mainly due to a decrease in general
and professional fees.
Liquidity and Capital
Resources
The
following summary data is presented for the period ended September 30, 2011
(unaudited) and for the year ended March 31, 2011 (audited):
September
30, 2011
|
March
31, 2010
|
|||||||
(unaudited)
|
(audited)
|
|||||||
Current
assets
|
$
|
579
|
$
|
994
|
||||
Total
Assets
|
11,579
|
12,828
|
||||||
Total
current liabilities
|
79,750
|
78,201
|
||||||
Total
liabilities
|
79,750
|
78,201
|
||||||
Total
stockholders' equity
|
(68,171
|
)
|
(65,373
|
)
|
||||
Working
Capital
|
(79,171
|
)
|
(77,207
|
)
|
||||
Net
Cash Used by Operating Activities
|
(6,853
|
)
|
(2,055
|
)
|
The
current economic conditions have negatively affected our business model. There
is an abundance of demand for refinancing, however the credit markets do not
offer the supply of loan products with which to fund these requests, therefore
mortgage financing has decreased, as has our closings on mortgages.
Additionally, there has been a decrease in the overall number of housing sales
and real estate values further reducing the number of transactions requiring
mortgage financing and the amounts of those mortgages.
Cash used
in operations increased, primarily due to the payment of accounts payables and
accrued expenses. Our cash requirements are normally
minimal. We have cut our fixed overhead to approximately $800 a
month. Our principle shareholder has agreed to assume personal responsibility
for the repayment of any company debt and to personally fund any future expenses
of the public filings as needed.
We
finance our operations primarily through operating activities. Those activities
have not always been adequate for the cash requirements of the
business. From time to time it is necessary for the company to
increase cash through the sale of stock through private investors or through
temporary loans from and by the majority shareholder. We believe we can
currently satisfy our cash requirements for the next twelve months with our
current cash and expected revenues from operations. We cannot assure investors
that adequate revenues will be generated. Even without sufficient revenues, due
to the current economic conditions, in the next twelve months, we anticipate
that proceeds received from securities sales and or, the attainment of proceeds
from temporary debt financing will enable AFF to continue with
operations.
At
September 30, 2011 the Company had minimal cash to meet current
obligations. The Company may rely upon the issuance of common stock
and additional capital contributions from shareholders to fund any operating
shortfall.
As
reflected in the unaudited financial statements, as of September 30, 2011, we
have an accumulated deficit of $(1,306,373) and negative working capital of
$(79,171). For the six months ended September 30, 2011 we used cash
in operations in the amount of $(6,853). These issues raise
substantial doubt about its ability to continue as a going concern. The ability
of the Company to continue as a going concern is dependent on the Company's
ability to maintain profitability and or attain funding through additional share
sale or debt. These unaudited financial statements do not include any
adjustments that might be necessary if the Company cannot continue as a going
concern.
Off-Balance Sheet
Arrangements
Agreement
from Mr Stirling to personally assume corporate debt and fund the future costs
of public filings as needed.
Significant Accounting
Policies and Recent Accounting Developments
The
Company has carefully considered the new pronouncements that alter previous
generally accepted accounting principles and does not believe that any new or
modified principles will have a material impact on the corporation’s reported
financial position or operations in the near term.
Item
3. Quantitative
and Qualitative Disclosures About Market Risk.
Not
required for smaller reporting company.
Item
4. Controls
and Procedures.
(a)
Management’s Conclusions Regarding Effectiveness of Disclosure Controls and
Procedures.
The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting. The Company’s internal
control over financial reporting is a process designed under the supervision of
the Company’s Chief Executive Officer to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of the Company’s
financial statements for external purposes in accordance with U.S. generally
accepted accounting principles.
With
respect to the period ending September 30, 2011, under the supervision and with
the participation of our management, we conducted an evaluation of the
effectiveness of the design and operations of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) promulgated
under the Securities Exchange Act of 1934 and based on the criteria for
effective internal control described in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
Based
upon our evaluation regarding the period ending September 30, 2011, the
Company’s management, including its Chief Executive Officer has concluded that
its disclosure controls and procedures were not effective due to the Company’s
limited internal resources and lack of ability to have multiple levels of
transaction review. Through the use of external consultants and the
review process, management believes that the financial statements and other
information presented herewith are materially correct.
The
Company’s disclosure controls and procedures are designed to provide reasonable
assurance of achieving their objectives. However, the Company’s
management, including its Chief Executive Officer does not expect that its
disclosure controls and procedures will prevent all error and all
fraud. A control system, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the
control system are met. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefit of
controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected.
(b)
Changes in Internal Controls.
The
Company has tried to enhance its internal controls over financial reporting,
primarily by evaluating and enhancing process and control
documentation. Due to personnel limitations, the Company has hired a
number of consultants to help prepare the required
filings. Management discusses with and discloses all matters with the
consultants and the Company’s auditors.
PART
II – OTHER INFORMATION
Item
1.
|
Legal
Proceedings.
|
None
for period.
Item
1A.
|
Risk
Factors.
|
Not
required for smaller reporting company.
Item
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds.
|
There
was none for the period.
Item
3.
|
Defaults
Upon Senior Securities.
|
There
was none for the period.
Item
4.
|
Submission
of Matters to a Vote of Security
Holders.
|
There
was none for the period.
Item
5.
|
Other
Information.
|
|
None
required
|
Item
6.
|
Exhibits.
|
Exhibit No.
|
Description
|
|
31(a)
|
Rule
13a-14(a) Certification – Chief Executive and Chief Financial
Officer
|
|
32(a)
|
Section
1350 Certification – Chief Executive and Chief Financial
Officer
|
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Date:
November 14, 2011
|
American
First Financial, Inc.
|
|
|
||
By:
|
/s/ J.
R. Stirling
|
|
J.
R. Stirling, President
|